2011's Conglomerates Winners and Losers

What a crazy year it's been for investors. The S&P 500 jumped over 8% by May, only to turn around and find itself down over 10% in August, mainly as a result of the European debt crisis and Washington's inability to agree on a solution to our debt dilemma. Now, at the end of December, the S&P has fought back and is poised to end the year essentially flat.

But while the markets as a whole didn't change much overall for the past 52 weeks, there were certainly some conglomerates that had a year to remember and some that had a year to forget.

Here's a list of how conglomerates performed in 2011:

Company

Percent Return in 2011

Tyco (NYSE: TYC  ) 12.4
Honeywell 1.5
Danaher (NYSE: DHR  ) 0.7
Dover (1.4)
General Electric (NYSE: GE  ) (2.5)
Berkshire Hathaway (NYSE: BRK-B  ) (4.7)
3M (NYSE: MMM  ) (6.0)
Textron (NYSE: TXT  ) (23.2)
Siemens (NYSE: SI  ) (24.6)

Source: S&P Capital IQ. Only includes companies listed on U.S. exchanges that contain a market capitalization greater than $500 million. Returns as of Dec. 27.

The shaky economy in 2011 certainly took its toll on many of these companies. As large international conglomerates, these companies are uniquely exposed to the global economy and to the crisis in Europe.

Some, such as Tyco, have weathered the storm better than others. Tyco has managed to gain over 12% on the year. That's mainly due to the plan Tyco announced in September to split its business into three separate companies, the second such split in less than a decade for Tyco. The three separate publicly traded businesses will be its ADT home alarm unit, its flow control group, and its commercial fire and security unit. The company believes that it can best return value to its shareholders by separating the units, and shareholders apparently agreed, sending the stock up by double digits for the year.

Despite its fairly flat stock price for the year, another company consistently in the headlines was General Electric. GE completed its $3 billion acquisition of infrastructure technology company Dresser in early February. But later, the company's aviation unit suffered a sizable (though not unexpected) blow when it decided to give up its effort to develop an alternative engine for the F-35 Joint Strike Fighter. Finally, this week GE Capital announced that it will acquire MetLife's U.S. retail deposit business, a move that should help reduce risk at GE Capital by helping to shore up its funding base.

Is anyone surprised that the worst performer on this list is the one most exposed to Europe? Munich-based Siemens has had a rough go in 2011. In early May, before the severity of the European debt crisis was fully known, Siemens was trading at over $140 per share. As I write this, the company has dropped to under $94 per share. Desperate to become less reliant on Europe for its revenues, Siemens recently enlisted former general Stanley McChrystal to help gain more business from the U.S. government.

While the performance of these companies is largely tied to the performance of the global economy, we believe that we've discovered a stock that'll thrive no matter what the macroeconomic climate. To see the company that we've picked out for explosive growth ahead, check out our brand-new free report called "The Motley Fool's Top Stock for 2012." You can get instant access to the name of this company by clicking here -- it's free.

Brendan Byrnes owns no shares of any company mentioned above. The Motley Fool owns shares of Berkshire Hathaway and Textron. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and 3M, as well as creating a diagonal call position in 3M. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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